TI Fluid Systems said the 176p-per-share offer from ABC Technologies “significantly undervalued” the FTSE 250 company and its prospects. The company manufactures fluid-carrying systems and fuel tanks for cars and lorries.
ABC, which is backed by Apollo Global Management, said it was considering its position. It is expected to provide an update shortly.
Bain Capital, the private equity firm, floated TI Fluid Systems at 255p per share in 2017 and since then has been reducing its holding. The firm generated about £68 million from selling 50 million shares at 135p in March, but it still holds a stake of about 28 per cent. Stephen Thomas, 49, a partner at Bain, sits on the board of TI Fluid Systems as a non-executive director.
The shares rose 13 per cent, or 18p, to 164p this morning after closing up 10p, or 7.4 per cent, to 145¾p on Friday.
The board has said it is “confident in the strategy and prospects” of the group as a standalone entity. In a statement it said: “The board of TI Fluid Systems considered the proposal in detail with its advisers and unanimously concluded that it significantly undervalued TI Fluid Systems and its prospects and accordingly the proposal was rejected early last week. The board strongly urges shareholders to take no action at this time.”
Analysts at Jefferies, the investment bank, said: “This is certainly not a knockout offer, despite industry uncertainty and volatility. Despite the highly challenging backdrop for suppliers, we are more positive on TI Fluid Systems than we have been while covering the stock. The group has seen strong operational and strategic momentum as of late and it should benefit further from the wider shift to hybrid vehicles.”
ABC said that it was weighing up its next move: “Although the possible offer was also rejected by the board of TI Fluid Systems, ABC Technologies remains interested in a possible transaction and is therefore considering its position. There can be no certainty that an offer will be made, nor as to the terms on which any offer might be made, even if the pre-conditions are satisfied or waived.”
UK Takeover Market
The takeover attempt by ABC Technologies on TI Fluid Systems is the latest example of a trend in the UK market, where private equity firms and foreign buyers are increasingly looking to acquire undervalued UK companies.
The UK stock market has struggled in recent years, with the FTSE 100 index down by more than 10% since the start of 2024. This has made UK companies more attractive to potential acquirers, who are looking to take advantage of the relatively low valuations.
The takeover bid for TI Fluid Systems is also notable for the fact that it comes from a Canadian firm. This reflects the growing interest from overseas buyers in the UK market.
In recent years, there have been a number of high-profile takeovers of UK companies by foreign buyers, including the acquisition of ARM Holdings by SoftBank, the acquisition of GlaxoSmithKline's consumer healthcare business by Unilever, and the acquisition of Cadbury by Kraft Foods.
This trend is likely to continue in the coming years, as UK companies continue to be attractive to foreign buyers.
TI Fluid Systems’ Future
TI Fluid Systems has a strong track record of growth and profitability. The company has been able to navigate the challenges of the automotive industry, such as the shift to electric vehicles, and has continued to grow its business.
The company is also well-positioned to benefit from the growth in the global automotive market. The International Organization of Motor Vehicle Manufacturers (OICA) estimates that global automotive production will reach 94.7 million units in 2024.
However, TI Fluid Systems faces competition from a number of other companies in the automotive parts industry. These include companies such as Bosch, Continental, and Delphi Automotive.
The company is also facing a number of other challenges, including the rising costs of raw materials and labor, and the increasing complexity of automotive technology.
Future for TI Fluid Systems
Despite the challenges, TI Fluid Systems has a bright future. The company has a strong brand, a loyal customer base, and a skilled workforce. The company is also well-positioned to benefit from the growth in the global automotive market.
The company is likely to continue to invest in research and development, and to expand its operations in emerging markets. It is also likely to continue to make acquisitions to enhance its portfolio and operations.
The takeover attempt by ABC Technologies is a sign of the confidence that investors have in TI Fluid Systems. It is also a sign of the growing interest from overseas buyers in the UK market. The company is well-positioned to benefit from the growth in the global automotive market and is likely to continue to grow its business in the coming years.
